Chapter 2
Shoaib Waqas 18-Dec-10


Adam Smith·s Contribution to the Field of Management Wrote the Wealth of Nations (1776) Advocated the economic advantages that organizations and society would reap from the division of labor:  Increased productivity by increasing each worker·s skill and dexterity.Essentials of management Chapter 2 Evolution of management theory The driving force behind the evolution of management theory is the search for better ways to utilize organizational resources.Taylor Prepared by Shoaib Waqas . after the industrial revolution. the production process will become more efficient. Taylor(1856-1915) The systematic study of the relationships between people and tasks for the purpose of redesigning the work process to increase efficiency Taylor believed that if the amount of time and effort that each worker expends to produce a unit of output can be reduced by increasing specialization and division of labor. gather all the informal job knowledge that workers possess and experiment with ways of improving how tasks are performed Fredrick W. The creation of labor-saving inventions and machinery Job Specialization Process by which a division of labor occurs as different workers specialize in specific tasks over time ‡ Workers who specialized became much more skilled at their specific tasks ‡ Increasing job specialization increases efficiency and leads to higher organizational performance Industrial Revolution Machine power began to substitute for human power Lead to mass production of economical goods Improved and less costly transportation systems became available Created larger markets for goods Larger organizations developed to serve larger markets Created the need for formalized management practices Classical Approach The term used to describe the hypotheses of the scientific management theorists and the general administrative theorists. Evolution of modern management began in the late nineteenth century.  Time saved that is commonly lost in changing tasks. Scientific Management ‡ Frederick W. Four Principles of Scientific Management 1) Study the way workers perform their tasks.

Find better ways to perform each component action 3. Motion Study Breaking each task into its separate motions and then eliminating those that are unnecessary or repetitive. and train them to perform the task according to the established rules and procedures 4) Establish a fair or acceptable level of performance for a task. Reorganize each of the component actions so that the action as a whole could be performed more efficiently-at less cost in time and effort Time Study Timing how long it takes good workers to complete each part of their jobs. and then develop a pay system that provides a reward for performance above the acceptable level The Principles of Scientific Management (1911) Advocated the use of the scientific method to define the ´one best wayµ for a job to be done  Believed that increased efficiency could be achieved by selecting the right people for the job and training them to do it precisely in the one best way  To motivate workers.Essentials of management 2) Codify the new methods of performing tasks into written rules and standard operating procedures 3) Carefully select workers who possess skills and abilities that match the needs of the task.  Separated managerial work from operative work. he favored incentive wage plans. Scientific Management Contributors ‡ Frank(1868-1924) and Lillian Gilbreth (1878-1972) 1. ‡ Henry Gantt  Incentive compensation systems  Gantt chart for scheduling work operations  Improvement on Taylor·s Incentive System  Each Worker to win 50 cent bonus for finishing assigned work load  Supervisor to earn bonus for each worker who reached daily standard plus an extra bonus if all workers reached it Lillian Gilbreth Frank Gilbreth Prepared by Shoaib Waqas . Break up and analyze every individual action necessary to perform a particular task into each of its component actions 2.

Scalar chain-authority in an organization moves in a continuous chain of command from top to bottom. Unity of direction-the organization and employees are dedicated to one plan of action or set of objectives 6.The provision of justice and the fair and impartial treatment of all employees. Authority-delegated person ought to have the right to give orders and expects that they be followed. Prepared by Shoaib Waqas . 5. 7. Subordination of individual interest to the common interest-The interest of the organization takes precedence over that of the individual employee. y Henri Fayol (France) (1841-1925) Fourteen Principles of Management: Fundamental or universal principles of management practice 1.g. Remuneration-although Fayol provide no guidance on pay. Unity of command-employees should receive orders from only one person with authority. which machine parts should be oiled or replaced. Centralization-whether an organization should be centralized or decentralized depends upon such factors as communications and the importance of who should make the decision. 2. 4. applied. Discipline-Obedient. 11. Norms ² unwritten. Division of labor-work and task should be performed by people specialized in the work and similar tasks should be organized as a unit of department. the organization must pay remuneration according to their job(An equitable uniform payment system that motivates contributes to organizational success) 8.: An organizational norm in a restaurant might be that waiters should help each other if time permits. Equity. 10.Essentials of management General Administrative Theory The study of how to create an organizational structure that leads to high efficiency and effectiveness Rules ² formal written instructions that specify actions to be taken under different circumstances to achieve specific goals Rule: At the end of the day employees are to leave their machines in good order. 3. respectful employees are necessary for the organization to function. informal codes of conduct that prescribe how people should act in particular situations E. 9. Order-The arrangement of employees where they will be of the most value to the organization and to provide career opportunities. Standard Operating Procedures (SOPs) ² specific sets of written instructions about how to perform a certain aspect of a task SOP: Specifies exactly how they should do so.

3) The extent of each position·s formal authority and task responsibilities and its relationship to other positions should be clearly specified. shared enthusiasm foster devotion to the common cause (organization) [ Promoting team spirit will give the organization a sense of unity. not because of their social standing or personal contacts. Prepared by Shoaib Waqas . a clearly defined hierarchy. 13. 4) Authority can be exercised effectively when positions are arranged hierarchically. Esprit de corps-friendship. so employees know whom to report to and who reports to them. 1) A manager·s formal authority derives from the position he holds in the organization. detailed rules and regulations. and impersonal relationships Max Weber . Stability of tenure of personnel-Long-term employment is important for the development of skills that improve the organization·s performance. 14. standard operating procedures. 2) People should occupy positions because of their performance.Essentials of management 12. Initiative-workers are exhorted to be productive and motivated. and norms so they can effectively control behavior. 5) Managers must create a well-defined system of rules. ] y Max Weber (Germany) (1864-1920) Developed the principles of bureaucracy as a formal system of organization and administration designed to ensure efficiency and effectiveness Bureaucracy: Ideal type of organization characterized by division of labor.

‡ Hugo Munsterberg Created the field of industrial psychology³the scientific study of individuals at work to maximize their productivity and adjustment. ‡ Advocates believed in people·s capabilities and were concerned with making management practices more humane. Human Relations Movement ‡ Based on a belief in the importance of employee satisfaction³a satisfied worker was believed to be a productive worker. Dale Carnegie Abraham Maslow Douglas McGregor Follet Prepared by Shoaib Waqas .Essentials of management Human Resources Approach The study of how managers should personally behave to motivate employees and encourage them to perform at high levels and be committed to the achievement of organizational goals ‡ Robert Owen Scottish businessman and reformer who advocated for better treatment of workers Claimed that a concern for employees was profitable for management Mary Parker and would relieve human misery. Psychology and Industrial Efficiency (1913) ‡ Mary Parker Follett Concerned that Taylor ignored the human side of the organization ‡ Suggested workers help in analyzing their jobs ‡ If workers have relevant knowledge of the task. then they should control the task Recognized that organizations could be viewed from the perspective of individual and group behavior Believed that individual potential could only be released by group association ‡ Chester Barnard Saw organizations as social systems that require human interaction and cooperation. Expressed his views on the ´acceptance of authorityµ in his book The Functions of the Executive (1938). Hawthorne Studies A series of studies done during the 1920s and 1930s that provided new insights into group norms and behaviors y Hawthorne effect³ workers· attitudes toward their managers affect the level of workers· performance ‡ Changed the prevalent view of the time that people were no different than machines.

Essentials of management The Quantitative Approach Operations Research (Management Science) Use of quantitative techniques to improve decision making ‡ applications of statistics ‡ optimization models ‡ computer simulations of management activities  Evolved out of the development of mathematical and statistical solutions to military problems during World War II. leading.  Likely to experience entropy and lose its ability to control itself  Open system: a system that dynamically interacts with its environment Prepared by Shoaib Waqas . information models. optimization models. and controlling activities are circular and continuous functions of management. The Systems Approach Defines a system as a set of interrelated and interdependent parts arranged in a manner that produces a unified whole  Closed system: A self-contained system that is not affected by changes in its external environment. and computer simulations to improve management decision making for planning and control. Process Approach Planning.  Involves the use of statistics.

motivational techniques. Four Contingency Variables  Organization size (coordination)  Routineness of task technology (task complexity dictates structure)  Environmental uncertainty (change management)  Individual differences (managerial styles .Essentials of management ‡ Synergy ² the performance gains that result from the combined actions of individuals and departments The Contingency Approach Replaces more simplistic systems and integrates much of management theory. and job design) Prepared by Shoaib Waqas .

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